New trends in the private equity sector

Interview BFM Business

Interview on the BFM Patrimoine program of 15/05/2023. Click on the link to access Estelle Dolla's interview about the new trends in the private equity sector.

Discover Estelle Dola's analysis of Private Equity, a market that used to be reserved for a certain category of institutional investors, but which is increasingly opening up to individual investors looking for attractive investment opportunities.

Why Private Corner?

Private Corner is an asset management company that received its AMF approval in November 2020. What makes Private Corner special is that we are a "digital native" private equity company, since we have coupled a digital platform with our management company so as to be able to handle a large volume of transactions involving unlisted assets as smoothly and securely as possible. Private Corner's ambition is to bring together two worlds that haven't spoken to each other until now: that of asset management companies, which have traditionally catered for institutional investors or large families, and that of wealth management advisors, private banks and family offices, which need to diversify their clients' portfolios in unlisted markets. From as little as €100,000, we give them access to fund strategies that are usually only available from several million euros, and therefore to the associated strategies and performances.

A different positioning in the unlisted market

Private Corner's aim is to position itself differently in the unlisted investment market. Private Corner is a pioneer in institutionalizing access to private equity through its fully digitalized private equity investment platform. Our customers are distributors, and we want to enable them to build a portfolio tailored to their customers' needs, expectations and investment horizon. The idea was to enable distributors to add even more value in building a portfolio of unlisted assets that perfectly matches their clients' assets.

A fast-growing private equity market

The growing momentum of the private equity market is under the impetus of the Pacte law, which encourages a portion of French people's savings to be drained into the real economy. Also, if you deprive yourself of investing in unlisted markets, you deprive yourself of all the value creation that takes place upstream of market listing. And historically, there has been a fairly strong dichotomy between the performance delivered to institutional investors and the difficulty for private investors to gain access to these same types of underlyings, the quality of the underlyings and therefore the associated performance. The aim behind the creation of Private Corner is to bring together the experience of the private investor and that of the institutional investor. In this way, we act as a link between asset management companies and professional advisors and asset managers. We're here to institutionalize the private client's experience of unlisted markets.

Development supported by Armen Capital

Armen Capital, the European pioneer of GP Stakes, is going to help us consolidate our position as leader in the French unlisted market, but also to expand our reach on a European scale, since if private equity is dynamic in France, we are convinced that it is already following the same trend in Europe too, and that we will have to find ways of helping professionals, each in their own market, to diversify their assets into unlisted assets. In keeping with this professionalization approach, we are in a B2B2C market, complementing the added value of the management companies' and advisors' track records. Armen's acquisition of a stake in Private Corner will enable us to accelerate our growth in France, giving us even greater credibility with asset management companies and private banks in particular, since we already have a network of 250 distributors. In just over two years, thanks to this network, we have managed to collect 400 million euros from a clientele of 1,800 end customers. But to accelerate, it's important to have a strategic and industrial partner to meet our growth ambitions.

A dedicated offering for individual investors

Our offer is not aimed at everyone, since our funds are accessible from €100,000. That's the regulatory requirement. So we're targeting a clientele of well-informed investors, professionals and the like. The minimum subscription to one of our funds is €100,000, which is then deployed over a period of 4 to 5 years. It's also the distributor's job to inform his customers, taking into account the deployment schedule and their savings capacity.

Nevertheless, it's clear who you're talking to. You are, in spite of everything, a very good advocate of the world of private equity. What does an investor think if he says to himself: OK, what she's offering me this morning isn't for me, but he says: It's a pity, because I was tempted by this private equity, I hear about it in solutions that are a little more retail and so on? But what would a more lambda investor say to himself when apprehending this question of private equity? It's a driving force today, I'd go so far as to say, almost unavoidable in a portfolio in the broadest sense?

Advice for investors wishing to invest in private equity

Investors who do not have the necessary funds to subscribe to the Private Corner offer can still invest in private equity. But they need to be very careful, and follow one basic rule: be accompanied by a wealth management or asset management professional. The private equity business is highly regulated and complex. When you're an investor, you can't say to yourself: there are so many solutions on the private equity market today. You have to keep in mind that if you don't want to make a mistake in your investments, it's better to be accompanied by a professional than to say to yourself: I'm going to manage on my own. In the end, this is always to the detriment of a good strategic choice in terms of allocation. We're also in a fast-changing, fast-developing sector. There are a huge number of players, each with a more or less similar target market, or on the contrary, who will be addressing a target market that's a little less qualified than the one we're addressing. Nevertheless, it is the role of the independent financial advisor, the private banker or the family office to put their clients in touch with the best player to obtain the best risk/return ratio according to the investment possibilities of each of their clients.

The wealth management sector in brief

The term "estate" refers to all the assets and rights that make up the assets of a person or entity. Assets generally include both tangible property (such as real estate, vehicles, works of art, etc.) and intangible property (such as copyrights, trademarks, patents, etc.).

Assets also include financial items such as bank accounts, investments, life insurance, pension funds and other financial assets. Financial debts and obligations, such as mortgages, personal loans and tax debts, are also part of the estate.

Wealth management is important to ensure the preservation and growth of assets, as well as to plan the transmission of wealth to future generations or designated beneficiaries. It can also include estate planning strategies and other legal and financial considerations aimed at maximizing the value of assets and achieving the financial and personal objectives of the individual or entity concerned, within an accepted risk and timeframe.

Private equity investments present certain risks. They are generally illiquid, meaning that investors may not be able to withdraw their funds quickly, and they may require longer investment horizons. In addition, investors may lose all or part of the capital invested. It is important to seek professional advice before investing.

Private equity in brief

Private equity is a form of financial investment in companies that are not listed on the stock exchange, i.e. companies that do not sell their shares on the public markets. Private equity generally involves the purchase of shares in a company, either directly or through a specialized investment fund.

The main objective of private equity is to generate high returns by investing in companies with strong growth potential, but which may require operational changes, reorganization or financial strengthening to reach their full potential. Private equity investors often seek to take an active role in the management and direction of the business in order to improve its operational performance and profitability.

The main categories of private equity include :

• Venture Capital: Investment in start-ups and emerging companies with high growth potential.
• Development capital: Investment in companies in their growth phase, often to support their expansion.
• Buyout: Acquisition of an existing company with the aim of turning it around, developing it and reselling it at a later date.
• Transfer capital: Investments made during the transfer of a company whose majority shareholders wish to withdraw.

Private equity can be considered an alternative asset class, as it differs from traditional investments in listed equities or bonds. Private equity investments are generally illiquid, meaning that investors may not be able to withdraw their funds quickly, and they may require longer investment horizons.

Institutional investors such as pension funds, sovereign wealth funds, insurance companies and family offices often invest in private equity to diversify their portfolios and seek higher returns over the long term.